Money Management

The majority of Americans are afraid of running out of money in retirement. Keep reading to learn three strategies that can keep you in the black. 

If you’re not quite at retirement age, you have the advantage of learning from those who have already entered their golden years. While commercials typically show retired couples living in the lap of luxury, the truth is, many do not. According to the Current Population Survey Annual Social and Economic Supplement (CPS ASEC), the average American adult aged 65 and older brought in $75,254 in 2021. However, the median income for that group was $47,620.

What can we learn from those who ended up with enough money to fund their dreams and what can we learn from those who wish they’d done more?

While your financial advisor undoubtedly has detailed plans for you to follow, here we offer three easy-to-remember, uncomplicated tips.

1. Plan to live on guaranteed income

View your most recent Social Security statement online. There, you’ll learn how much you’re expected to receive in Social Security each month, based on how much you’ve paid in Social Security taxes through the years and when you plan to retire. To that amount, add any pension payments you have coming your way. We’ll call this your guaranteed income.

Once you know how much you’re working with, you know how much you need to whittle your monthly payments down. That may mean paying off a vehicle or other consumer loan prior to retirement. It may lead to weather proofing your home to save on energy bills. Now is the best time to work on minimizing your post-retirement financial obligations.

Notice that we haven’t talked about how much you have socked away in retirement accounts? That’s because living on guaranteed income allows you to draw from your retirement fund to cover the things you truly want to do, like travel or even turn a hobby into a business.

If you have time to minimize your monthly financial obligations now, you’re fortunate.

2. Create a bear market fund

The stock market is cyclical, entering both bear and bull markets with some regularity. While making withdrawals from your retirement accounts makes sense when the bulls are running and the sun is shining, your best bet is to leave your retirement accounts alone when the market is in hibernation.

The wrong time to take money out of your retirement account is when the market — and your portfolio — take a dive. You not only deplete your assets at a quicker pace, you have less funds available to take advantage of a recovery.

Starting today, put a little money into an emergency savings account each month. These are the dollars you’ll draw from when the market is down. How much you need varies according to experts, but it may be a good idea to aim for enough in emergency savings to cover three years’ worth of bills.

Three years may be quite pessimistic (the average bear market lasts just shy of 10 months), but the long-term average frequency between bear markets is 3.5 years. Even if you don’t have to draw much from your emergency account during the first bear market you experience in retirement, there’s a fair chance you’ll need to draw from it again in a few years.

Tip: Don’t forget to factor in guaranteed income. For example, if your monthly bills average $4,000 but you receive $2,000 in Social Security or via a pension, you’ll need to draw $2,000 from emergency savings each month until the market is once again running with the bulls.

3. Lean on an annuity

One investment option that guarantees you regular payments throughout retirement is an annuity. According to the National Council on Aging (NCA), there are five types of annuities. The type of annuity you choose depends on your goals. For example, do you want payments to begin immediately or at some point in the future? Are you more interested in annuity payments based on a fixed amount of money or do you prefer to take some risk with a variable annuity?

While you can buy an annuity at any time, they are typically purchased when a person is near retirement age and has already taken advantage of pre-tax savings, such as a 401(k) or IRA.

Annuities are purchased through insurance companies, each with its own fee structure. Fees and administrative costs can eat into the value of your annuity, so make sure to go over a company’s fee structure with a fine-toothed comb before agreeing to one of its annuities.

There’s no easy way around it; unless you win the lottery, how well you live in retirement all comes down to planning. Your plan doesn’t have to be complicated to be successful. It just needs to be something you can stick with until the day comes to bid adieu to your workplace.

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One writer has never set foot in a Costco store. Find out why she doesn’t think she’s missing out, despite the club’s popularity. 

Some might call it heresy, but I can honestly say I have never set foot inside a Costco warehouse club store. The chain is beloved by its members, but I just don’t feel the need to join their ranks. No, I don’t live in the boonies, hours away from the nearest club. I don’t necessarily have anything against the membership fees that shoppers must pay for the privilege of shopping at Costco — $60 annually for a basic membership and $120 for the executive. But I do have my own set of reasons why I firmly believe that I’m better off doing my shopping elsewhere.

1. Location, location, location

Some might consider my nearest Costco to be in a prime location. It’s a hop, skip, and a jump from a hugely popular and always-busy large outdoor shopping mall. The location brings a ton of traffic through the area. I have a couple issues with that, though. Primarily, while my home is located only about 11 miles from Costco, it takes approximately 25 minutes to get there by car due to traffic and my proximity to the freeway.

So, rounding up to 30 mins each way to allow for parking and getting inside the store, I automatically would have to add an extra hour onto my planned shopping time. Not ideal, as I’m someone who likes to get in and out as quickly as possible and not waste time grocery shopping — that is, when I even opt to do it myself instead of utilizing grocery delivery services.

2. It’s just my fiancé and I

With only two mouths to feed and two bodies to clothe, bathe, and clean up after, we simply just don’t have the need for a whole lot of “stuff.” Costco is best known for selling goods in large quantities. That means you can get an excellent deal on large bags of prepackaged salads and extra-large bottles of aspirin, but those things are really only a good deal if you can use them before they go bad. And there’s no way that we could accomplish that.

Besides the fact there are only two of us, we also have vastly different eating habits and grocery preferences, causing us to largely do our own individual shopping. Again, not really ideal for taking advantage of the perks of a warehouse club.

“What about paper goods and cleaning supplies?” you might be wondering. Sure, while the idea of a 24-pack of paper towels or a 60-count package of toilet paper sounds lovely, the problem with amassing large quantities of those goods is that you need somewhere to store them. And with a home meant to house two people, we don’t have a whole lot of extra space for the luxury of bulk paper goods.

3. I’m a little stuck in my ways

Admittedly, I can be a bit stubborn once I find something that works for me. My chosen grocery store (a Meijer store) is located only one mile from my home. I don’t have to get on any major roads or battle any traffic to get there. I know where everything is, and heck, I have even come to know a decent amount of the staff. At this stage in my life, I’m really just not looking to make any huge changes, so my current grocery store is just perfect for me.

Not only is it convenient, comfortable, and fairly priced, but the store offers its own member rewards program called mPerks. Every shopping trip earns me rewards that compile and become credits that I can use towards future purchases. The store also commonly offers extra mPerks for things like filling a prescription (which I also do there) or purchasing specific categories of goods at certain times. By combining these store rewards with a good cash back credit card that earns me 1.5X points on all purchases (and 5X points on grocery purchases for one quarter per year), I’m reaping lots of discounts and credit card rewards on my weekly spending.

What doesn’t work for me might be perfect for you

If you’re a loyal Costco shopper, I’m not here to tell you you’re doing anything wrong. Ultimately, if you’ve got a nearby Costco warehouse club and you can take advantage of the deals on bulk goods, and you love filling up at its gas stations (known for being some of the cheapest around), then I’m happy for you!

It’s important to weigh several factors when deciding which grocery store is best for your personal finances (and your mental well-being!). Things like proximity, prices, quality of goods, and even store cleanliness can all factor into your decision. Wherever you choose to shop, consider using coupon apps and keep an eye out for sales flyers advertising goods you purchase often. That way, you can stock up when prices are reduced. And if you don’t already have a go-to card for your shopping trips, consider applying for one of the best credit cards for groceries to earn the most back on your grocery spending.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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A 10-point credit score drop usually isn’t a big deal, but there are exceptions. Read on to learn more. 

Your credit score is an indication of how trustworthy a borrower you are. When you apply for a new loan or credit card, the lender or issuer will run a credit check to make sure it’s not taking on too much risk in lending you money or extending you a line of credit. So the higher your credit score is, the more likely you’ll be to not only get approved for a loan or credit card, but snag a more affordable rate on any funds you’re borrowing.

That said, it’s common for credit scores to fluctuate frequently. And you may find that your credit score drops 10 points numerous times in your life.

In most cases, a 10-point drop in your credit score won’t be a big deal, and it won’t impede you from being able to borrow money when you want to. But in rarer cases, a 10-point credit score drop might be a problem.

What can make your credit score drop 10 points?

There are several things you might do that result in a 10-point drop in your credit score. First, the simple act of applying for a new loan or credit card might cause your credit score to drop five to 10 points. Secondly, if your credit card balance rises a bit but not drastically, that, too, could cause a modest drop to your credit score in the ballpark of 10 points.

For the most part, a 10-point credit score drop isn’t something to stress out over — especially if your credit is great to begin with. Credit bureau Experian says that a credit score of 800 to 850 is exceptional. If you start out with a credit score of 830 and it drops to 820, that’s really not a big deal at all. A score of 820 will still put you in a position where you’re extremely likely to get approved for whatever loan or credit card you apply for.

Similarly, let’s say you start out with a credit score of 690, which is good, and then your score drops to 680. A 680 is also considered good, so all told, that 10-point drop isn’t bumping you from one credit score category to another.

On the other hand, let’s say your credit score falls from a 620 to a 610. You generally need a minimum credit score of 620 to qualify for a conventional mortgage loan. So in this specific example, a 10-point credit score drop could be problematic.

How to avoid a 10-point hit to your credit score

You can potentially avoid modest drops in your credit score by not applying for new loans or credit cards and keeping your balances on your credit cards relatively low compared to your spending limit. But in reality, there’s generally no sense in taking steps to actively avoid a 10-point credit score drop, namely because it’s usually not a very big deal.

In fact, let’s say there’s a great credit card offer you want to capitalize on that could result in a $300 sign-up bonus you can easily snag. Should you really pass up $300 to avoid a tiny hit to your credit score? Probably not, especially if your score is great to begin with.

On the other hand, a 100-point credit score drop could have a major impact on your finances, and your score might drop that much if you’re late with even a single bill. So rather than stress about 10-point drops, make sure you’re being timely with your bill payments so your credit score doesn’t suffer more extensive damage.

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Member’s Mark products are a great value, but are they really worth buying? Reviewers of these products sure think so. 

It’s one thing to talk about how discount and warehouse stores can save you money and help your finances. It’s another thing entirely to think about whether those savings are worth it.

Rarely is it worth it to sacrifice on the quality of a product — and, more importantly, your quality of life — for a few pennies (or even a few dollars). And I think we’ve all learned that lesson the hard way.

That’s why I was thrilled to discover for myself how well Sam’s Club and its Member’s Mark house brand bucked the trend. You really can save money and maintain a high level of product quality. I’m hardly the only Sam’s Club shopper to think so, either. Here are some of the items reviewers love.

1. Member’s Mark Ultra Premium Soft & Strong 2-Ply Toilet Paper

Details: 45 rolls, 235 sheets per roll

Cost: $22.98 ($0.02 per sheet)

Rating: 4.9 stars from 83,878 reviews

How it compares

Costco: Kirkland Signature toilet paper costs $0.03 per sheetWalmart: Great Value toilet paper costs $0.03 per sheetTarget: Up & Up toilet paper costs $0.02 per sheet (but only has 4.6 stars)

2. Member’s Mark Super Premium 2-Ply Select & Tear Paper Towels

Details: 15 rolls, 150 sheets per roll

Cost: $19.98 ($0.02 per square foot)

Rating: 4.9 stars from 69,717 reviews

How it compares

Costco: Kirkland Signature paper towels cost $0.02 per square footWalmart: Great Value paper towels cost $0.04 per square footTarget: Up & Up paper towels cost $0.03 per square foot

3. Member’s Mark Power Flex Tall Kitchen Trash Bags

Details: 13 gallon, 200 count

Cost: $18.98 ($0.095 per bag)

Rating: 4.8 stars from 21,007 reviews

How it compares

Costco: Kirkland Signature tall kitchen bags cost $0.11 per bagWalmart: Great Value tall kitchen bags cost $0.165 per bagTarget: Up & Up tall kitchen bags cost $0.17 per bag

4. Member’s Mark Deluxe Mixed Nuts with Sea Salt

Details: 34-ounce package

Cost: $12.48 ($0.37 per ounce)

Rating: 4.8 stars from 11,243 reviews

How it compares

Costco: Kirkland Signature deluxe mixed nuts cost $0.40 per ounceWalmart: Great Value deluxe mixed nuts cost $0.59 per ounceTarget: Good & Gather deluxe mixed nuts cost $0.57 per ounce

5. Member’s Mark Fair Trade Certified Donut Shop Coffee

Details: Single serve cups, 100 count

Cost: $27.98 ($0.28 per cup)

Rating: 4.7 stars from 9,365 reviews

How it compares

Costco: Kirkland Signature Breakfast Blend pods cost $0.33 per cupWalmart: Great Value Donut Shop pods cost $0.271 per cupTarget: Good & Gather Donut Shop pods costs $0.52 per cup

6. Member’s Mark Salted Sweet Cream Butter

Details: 4 1-lb packages

Cost: $12.68 ($3.17 per pound)

Rating: 4.9 stars from 6,614 reviews

How it compares

Costco: Kirkland Signature salted butter costs $2.98 per poundWalmart: Great Value salted butter costs $3.68 per poundTarget: Good & Gather salted butter costs $3.79 per pound

7. Member’s Mark Hotel Premier Luxury Bath Towel

Details: Assorted colors

Cost: $6.98 per towel

Rating: 4.8 stars from 5,051 reviews

How it compares

Costco: No Kirkland Signature towels, bath towel prices start at $12.99 each onlineWalmart: Hotel Style bath towels cost $11.74 eachTarget: Threshold Signature bath towels cost $11.20 each

8. Member’s Mark 4-Shelf Industrial Storage Rack

Details: Metal, 2,500 lbs per shelf capacity

Cost: $219.98

Rating: 4.8 stars from 3,511 reviews

How it compares

(The usual suspects don’t carry this product online. Compared with home improvement brands.)

Lowes: Kobalt metal racks start at $279 eachHome Depot: Husky metal racks start at $279 each

9. Member’s Mark Aller-Zyr, Cetirizine HCl, 10 mg., Antihistamine

Details: 400 count

Cost: $15.98 ($0.04 per tablet)

Rating: 4.9 stars from 2,023 reviews

How it compares

Costco: Kirkland Signature Aller-Tec costs $0.04 per tabletWalmart: Equate cetirizine HCl costs $0.119 per tabletTarget: Up & Up cetirizine HCl costs $0.16 per tablet

10. Member’s Mark Chicken Jerky Recipe Dog Treats

Details: 48 ounce package

Cost: $24.98 ($6.25 per pound)

Rating: 4.8 stars from 1,839 reviews

How it compares

Costco: No comparable treat for sale onlineWalmart: Ol’ Roy Jerky Sticks (beef) cost $3.51 per poundTarget: Kindfull Chicken Jerky treats cost $14.98 per pound

Compound the savings with sales and rewards

What makes many of these prices so interesting is that they aren’t sale prices, but regularly listed prices. So that leaves you a lot of room to get even more savings by stocking up when Sam’s Club runs one of its many, many sales and deals.

And don’t forget about rewards. If you’re a Sam’s Plus member, you’ll earn 2% back on your purchases.

Of course, you don’t need an upgraded Sam’s Club membership to earn rewards on your warehouse buys. Pay with one of our favorite rewards credit cards and you can earn a ton of cash back. Plus, that cash back will stack with any other deals or rewards for which you’re eligible!

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Brittney Myers has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale, Target, and Walmart. The Motley Fool has a disclosure policy.

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Everyone makes financial mistakes. If you’re afraid your mistakes have ruined your credit, take a look at steps you can take to set things right. 

If you’re relatively new to credit, you may have questions. It’s easy to understand that making payments on time and controlling your debt can build your credit score, but how can you damage your credit score? Here, we cover five ways your credit can take a hit.

1. Cosign a loan

Perhaps a dear friend or close relative approaches you, upset because they could not get a loan in their name. However, if you’re willing to co-sign the loan, the lender will use your credit history to determine whether the loan application is approved. What would you do?

Cosigning a personal loan can kneecap your finances. Let’s say you assume your friend or loved one is making all the payments. However, one day you receive a call saying payments haven’t been made in months. Your credit score takes the same hit as the person you cosigned for.

Solution: Only cosign for a person if you’re confident they will make payments. To protect yourself, request a copy of proof of payment each month so late payments don’t come as a surprise.

2. Attempt to keep up with the Joneses

One of the most expensive mistakes you can make is taking on debt to impress others. The more debt you carry, the higher your debt-to-income (DTI) ratio is. While DTI is not a factor used to calculate your credit score, lenders review your DTI before determining whether you qualify for a loan.

Let’s say your income is $5,000 a month, and your monthly debt is $2,000 (including rent, credit card payments, car loans, child support, and other loan payments). A lender divides your total debt by your monthly income: $2,000 ÷ $5,000 = 0.40 (40%).

DTI guidelines vary by lender, loan type, and purpose of the loan. For example, most lenders prefer to see a DTI below 36%. So if your DTI sits at 40%, you may have trouble qualifying for an auto or personal loan. That said, some mortgage lenders allow DTIs up to 45% (or up to 50% if you’re applying for an FHA-backed mortgage).

If you’re thinking of buying a home or car that’s more than you can afford to impress all your friends, think about how many sleepless nights you may face as you look for ways to lower your DTI.

Solution: Even if you were never a Scout, it pays to be prepared. You never know when you might need a consumer loan. Your best bet is to keep your DTI as low as possible, and the two best ways to lower your DTI ratio is to pay down debt or increase your income.

3. Make late payments occasionally

It’s easy to believe that a lender will overlook an occasional late payment if you pay most of your payments on time. That’s not the way it works, though. Most lenders make a monthly report to the three major credit bureaus — Equifax, Experian, and TransUnion. That report tells the credit bureaus how well you met your financial obligation that month. If you miss a payment even once, it damages your credit score.

Another common misconception is that making a partial payment is better than making no payment at all. A partial payment may be penalized the same as a late payment.

Solution: Be proactive. If there is no way to make a full payment, contact your creditor, explain the situation, and ask if there are options available that will protect your credit.

4. Open too many credit cards at once

Getting approved for a new credit card is a good sign; it means that your credit score is healthy. Open too many, though, and the situation may change. Here’s what happens:

You feel confident about your credit and open a handful of cards around the same time. You apply for a cash back card, a card that rewards you with airline miles, and two store credit cards.Each time you apply for a credit card, the card issuer runs a hard credit check, and each credit check drops your score a bit.The next time you apply for credit, the creditor looks at your record, realizes how often you’ve applied for credit, and a red flag pops up. You seem desperate for credit or, at the very least, unsure of what you’re doing.

Solution: When you apply for credit, do so sparingly.

5. Close credit card accounts

Let’s say you find yourself in debt. You want nothing more than to close your cards and cut them into a million pieces. However, there are a couple of ways closing credit cards can damage your score.

Debt-to-credit utilization ratio

Closing existing accounts impacts your debt-to-credit utilization ratio, sometimes called your credit utilization ratio (or rate). This ratio represents the total amount of revolving credit you currently use divided by the total amount of credit available.

In short, creditors prefer you to have access to more revolving credit than you use. Revolving credit includes credit cards and lines of credit that don’t require you to pay the same amount each month. Mortgage or car loans are not revolving credit and don’t factor into your debt-to-credit utilization.

Credit history

Another thing about closing a credit card account: Lenders want to see evidence that you’ve managed several different types of credit accounts over time. When you close an account, you shorten your credit history.

Solution: Take steps to pay off your credit card debt rather than close a card.

No one can protect your credit score but you. The trick is to take a beat before making a financial move to ensure it will enhance rather than hurt your score.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Not having credit cards could make your life harder, but there are ways around that. Read on to learn more. 

Although many Americans use credit cards on a regular basis, it can be easy enough to land in debt when you have credit cards at your disposal. Case in point: During the first quarter of 2023, U.S. credit card balances rose to $917 billion, according to data from TransUnion. That’s a 19.2% increase from just one year prior.

Because of the dangers of misusing credit cards, some financial experts will tell you that you’re better off without them. In fact, financial guru Dave Ramsey is known for his anti-credit-card stance. And on his website, it even says, “A life without credit cards is a life of freedom.”

The reality, however, is that when you don’t have any credit cards, it can be more difficult to build credit, and also, to pay for certain things, like hotel rooms and rental car reservations. However, this doesn’t mean that you can’t function without a credit card, either.

Building credit without a credit card

Charging expenses on a credit card and paying your bills month after month can serve the very important purpose of helping you build credit. But that doesn’t mean it’s your only option.

Any time you make consistent payments on a loan, it can help you build credit. So if you borrow for college and make your payments on schedule, that can help your credit. So can taking out an auto loan and repaying it month after month in a timely manner.

Paying for things without a credit card

A growing number of businesses are going cashless these days, so you may have some challenges if you don’t have a credit card in your name. However, in many cases, you can still use a debit card to make payments if a given establishment won’t accept cash.

You should also know that some landlords will report timely rent payments to the credit bureaus if you ask them to. So if you’re actively trying to build credit without a credit card, talk to your landlord about this option.

Now things can get a little trickier when it comes to booking a hotel room or reserving a rental car. But some hotels and rental car companies will accept a debit card instead of a credit card — you may just need to call around and figure out which ones will allow this.

Should you go without credit cards?

Not only can credit cards help you build credit and make it easier to pay for certain expenses, but they can also reward you financially for the purchases you’re making. Many credit cards offer cash back on everyday items like groceries and gas. So you might as well snag that cash on the things you need to buy anyway.

On the other hand, if you’ve run into issues with credit card debt before, then it’s easy to see why you may prefer not to use credit cards at all. And similarly, if you don’t trust yourself to not run up a large credit card tab, then you’re better off sticking to debit and cash.

It’s a good thing to be honest with yourself about whether you should have credit cards or not. And if you realize that your finances are better off without them, know that you can still build credit and find ways to pay for things like lodging that commonly require a credit card when you make your booking.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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